Amazon India's UPI payments service launch hampered by data norms

Amazon India’s plan to launch its own Unified Payments Interface (UPI)-based payments service has been hampered owing to RBI’s concerns regarding the storage of user data in India. The e-commerce giant is reportedly waiting for more clarity on the norms from the central bank.

Amazon is also concerned regarding the recently drafted Data Protection Bill and the laws pertaining to it. The development was first reported by the Economic Times.

In April, the RBI mandated that all payments system operators working in India needed to ensure that the data related to operating payment systems be stored in the country. This move could come into effect from October 15 this year, but there is uncertainty over its implementation due to the Data Protection Bill, 2018. A draft of this bill was submitted to the government last week and it overrides all sectorial regulators and all their directives. The bill requires all data fiduciaries to store a copy of users’ personal data and mandatory storage of ‘critical personal data’ within India only. The bill has, however, failed to explicitly define ‘critical data’.

Implementing the RBI’s directive would come as a strong blow for foreign companies operating in India. Not only would it cost these companies in setting up local data centres, but it may also not be allowed by regulations in their home countries.

Currently, such companies also fear that the central bank’s move could set a precedent for other countries to implement similar rules. While foreign firms have been lobbying strongly to ease the central bank’s regulation, their domestic counterparts, most notably Paytm, have been pushing the government for implementation of the said norms and not even allow mirroring of the data overseas.

Due to uncertainty over the data storage norms, WhatsApp’s payments service in India has also been stalled temporarily. However, the Facebook-owned company has severalotherissues halting its foray into the payments sector in India. Earlier today, India’s Economic Affairs Secretary S.C Garg said that allowing international payment firms operating in India to keep copies of user data in the country while retaining offshore storage operations could be a potential solution to the issue. We reported last month that the country’s finance ministry had proposed to ease the central bank’s guidelines on storage of payment system data. However, there has been no clarification on the matter either from the government or the central bank, causing panic amongst the payments companies.

Amazon’s foray into the UPI space

Last year, Amazon India head Amit Agarwal said that Amazon Pay would be integrated with National Payments Corporation of India’s (NPCI) unified payments interface (UPI). However, he did not mention specific timelines. In February this year, Amazon launched a UPI based payments option for customers making purchases on the website. According to an ET report, the e-commerce company is keen to expand its role in payments and had roped in Axis Bank to start issuing UPI handles to users of Amazon Pay. However, the central bank’s KYC norms caused a dip in the usage of mobile wallets, including Amazon Pay. While Amazon hoped to use its UPI based service to capture a larger section of the digital payments market, that may seem a little harder to do currently.